04.01.2023
The Cyprus property market is being weighed down by high construction costs and interest rates as Cypriots see their dream of owning a home not being fulfilled and real estate stakeholders are placing their hopes in foreign buyers.
Real estate agents and developers say that rising demand from foreign investors will offset the gap caused by the loss of local buyers.
According to the latest data from the Statistical Service, the building materials price index for November reached 133.94 units, an increase of 12.65% compared to the same month in 2021.
CEO D. Zavos Group said two trends will shape the market: the loss of local buyers and an increase in the number of foreigners looking for investment opportunities or considering moving to the island.
“Unfortunately, the number of Cypriots who can buy a house or apartment will decrease due to higher interest rates, which will make it almost impossible to get a loan,” Zavos said .
He added that, on the contrary, the market will see increased interest from foreigners coming to Cyprus to do business under the tax incentives provided by the government, or wishing to invest in the real estate sector.
“The high returns that property in Cyprus can still offer are much higher than in their home country, where prices no longer have the opportunity to rise and turn a profit. Therefore, the market in 2023 will be influenced by two factors. One of them will be the loss of Cypriots who cannot buy and foreigners who come to Cyprus to invest in properties with high annual returns of 6% to 8%. For example, property worth between 250,000 and 300,000 euros is rented out from 1,700 to 2,000 euros per month,” Zavos said .
Cyfield CEO George Chrysochos said property prices are expected to rise due to a lack of supply.
“The increase in the number of Russians and Ukrainians, Lebanese and Israelis eyeing Cypriot property, as well as the repatriation of Cypriots from the UK or other countries, especially after two years of Covid , has led to an increase in demand. Foreign investors come to Cyprus to do business and find neither offices nor apartments to live in. There are facilities under construction, but this is not enough.”
On the price increase, Cyfield ‘s CEO said: “They are expected to rise at a more reasonable rate this year, between 5% and 10%, compared to 20% or 25% last year.”
President of the Federation of Construction Contractors Associations (OSEOK) Stelios Gavriel noted that “an increase in the cost of building materials, which increased by more than 30% from November 2020 to November 2022, has affected the construction of new housing units for Cypriots. “Now they’ve changed their mind.”
Gavriel also confirmed an increase in the number of large projects such as offices and residential complexes. He argued that the market is saturated due to an increase in government projects to be implemented in 2023 and 2024, worth about 1 billion euros.
